STOCKHOLM (Reuters) - Israel's Robert Aumann and American Thomas Schelling won the 2005 Nobel economics prize on Monday for their "game-theory analysis," which can help resolve conflicts in trade and business -- and even avoid war.

Their studies have found uses in "security and disarmament policies, price formation on markets, as well as economic and political negotiations," said the Royal Swedish Academy of Sciences awarding the 10 million crown prize.

Aumann, 75, was born in Germany but is an Israeli and U.S. citizen who teaches at the Hebrew University of Jerusalem. Schelling, 84, teaches at the University of Maryland.

"Game theory" is a science of strategy, which attempts to determine what actions different "players" -- be they trading partners, employers and unions or even crime syndicates -- should take to secure the best outcome for themselves.

Schelling has been applying it to global security and the arms race since the 1950s while Aumann has conducted analysis of "infinitely repeated games" to identify what outcomes can be maintained over time.

"Insights into these issues help explain economic conflicts such as price wars and trade wars, as well as why some communities are more successful than others in managing common-pool resources," said the Academy citation.